Reflecting on 2023: Construction leaders revisit the past and anticipate the future

The start of a new year is often a time for us to reflect on the past and look ahead to the future. We cast a wide net to ask construction leaders for their thoughts. The respondents include CEOs, architects, construction association directors, researchers, unions and more. Here’s what they had to say:

What do you believe was the biggest story to come out of 2023 and why?

The Federal and Provincial Governments are finally listening to the development community and taking steps to address housing supply after years of industry pushing the issue to the forefront.  Also interesting to see the increased attention to automatic rezoning based on distance to transit hubs and missing middle housing strategies.

Mike Maierle, President ETRO Construction Limited

People and opportunities in construction have become a focus of discussion across the industry and beyond. Everyone is recognizing that the industry needs more people to build and maintain the built environment in Canada. There is a driving need to improve productivity, recruit people into the construction industry, and leverage innovative technologies to make it more attractive for everyone.

Dom Costantini, President, BLDR Consulting Corporation

In 2023, one of the most significant stories in the construction industry was the accelerated adoption and advancement of 3D concrete printing technology. This innovation garnered widespread attention due to its potential to revolutionize the construction sector.

Jeff Olafson – CEO, Business Development, Gardon Construction Ltd.

It would be a toss up between the economy and the various labour strikes held in 2023 as a result of the rising cost of living.

Brandon Bird, Chief Executive Officer, Bird Mechanical Ltd.

Affordability defines so much of the discussion we are having in construction. We have not been able to move the needle on our housing supply for the past 50 years. In 1972, 230,000 new homes were built in Canada. In 2022, 220,000 new homes were completed—and this year has trended even lower. Decades of regulations and red tape have choked the supply we need to keep home prices affordable for first time homebuyers and young families. Governments must act with urgency in four key areas: expedite permits and approvals, slash the punitive costs strangling home construction, recalibrate our immigration approach to alleviate undue strain on our resources, and, most critically, all three levels of government need to stop finger-pointing and working at cross-purposes, and instead work together meaningfully. Only through decisive and sustained action can we address this national crisis.

Chris Gardner, President – Independent Contractors and Businesses Association (ICBA)

High interest rates, high inflation, lack of affordable housing and commercial office space is empty!

Zenon Radewych, Principal, WZMH Architects

I think we saw the ripple effect of a few big stories play out in 2023. The housing crisis in B.C. and across the country dominated headlines and debates by government officials, but it also shined a brighter light on the skilled labour shortage in the sense that we can’t build more affordable homes without more boots on the ground.

Jeannine Martin, Vancouver Regional Construction Association (VRCA) President

On October 16th, Premier David Eby announced  his government will bring in a requirement for flush toilets on construction sites with 25 workers or more. The announcement came on the heels of a years-long advocacy push from the BC Building Trades. This is a landmark moment for construction workers in this province. For too long, workers have been forced to deal with undignified washroom facilities on the job.

Brynn Bourke, Executive Director, BC Building Trades

The most impactful narrative of 2023 was the likely stabilization of the interest rate environment by year’s end, a perception that will underpin many investment decisions. This reduction in uncertainty will provide businesses with a clear foundation for strategic planning and encourage long-term investments, providing both investors and companies with a more secure basis for capital allocation. It will also act as a catalyst for executing acquisition/disposition strategies and initiating construction starts.

Andrew Petrozzi, Director and Head of Canada Research, Newmark Canada

Certainly the Bank of Canada policy rate and its effects on rising interest rates. The first increase earlier in 2023 sent shivers throughout the real estate community both in commercial and residential. 2023 was already experiencing the crippling effects of rising costs of construction, coupled with the demands from all levels of government on taxes and levies for new construction and labour increases. The rise of interest rates created a new challenge for the health of our industry.

Mark Fieder, Principal and President, Avison Young Canada

What was the biggest construction innovation to come out of 2023?

I still believe as an industry we are lagging well behind other industries but I finally see more and more organizations focused on LEAN Construction, looking at pre-fabricated elements throughout projects and creating standard work.  Although not really innovative, I believe government mandated “flushable toilets” on construction sites will be a game changer in the long term and help attract more diversity to construction. 

Mike Maierle, President ETRO Construction Limited

Not an easy question to answer. I would say that software, AI, ML, Robotics, and Sensors are going to continue pushing the technology innovation in the industry. However, perhaps the biggest  innovation this year is coming through changes to zoning by-laws to allow more housing units on lots in many cities and municipalities that is being driven by the federal government’s CMHC Housing Accelerator Fund. This will drive increased investment and should increase housing supply. It will change the fabric of communities and neighborhoods.

Dom Costantini, President, BLDR Consulting Corporation

In 2023, the construction industry witnessed several innovations, but the most significant was likely the advancements in autonomous construction robotics. These robots, equipped with AI and machine learning capabilities, have been increasingly integrated into construction sites for tasks like bricklaying, painting, welding, and even complex assembly work.

Jeff Olafson – CEO, Business Development, Gardon Construction Ltd.

It’s hard not to be inspired with how rapidly the construction industry is embracing change in key areas – technology adoption, recruiting women and Indigenous workers, and talking more openly about mental health. Construction has an undeserved bad reputation for not moving faster in these areas. But the pace of change has accelerated, and I can think of no more exciting time to be pursuing a career in construction than today.

Chris Gardner, President – ICBA

We’re looking forward to AI and the impacts it might have on construction and the potential that it might have on fieldwork. We’re also hopeful for the promise of digitized permitting that will help streamline the permitting process in construction.

Jeannine Martin, VRCA President

It should never have been eliminated in the first place, but because it was…the biggest innovation was the return of Skilled Trades Certification in B.C. The Province of B.C. has selected 10 trades for compulsory certification (7 that came into effect on December 1st) including Steamfitter/Pipefitter, Refrigeration and Air Conditioning Mechanic, Gasfitter A & B, Sheet Metal Worker and Electrician. Up to 10 more trades are set to join the program in 2024.

Brynn Bourke, Executive Director, BC Building Trades

The rising prevalence and availability of low-carbon cement/concrete and other alternative wood-derived building materials. Cement production is one of the largest polluting sectors in the world in terms of global greenhouse gas (GHG) emissions. The industry’s increasing efforts to adopt low-carbon and carbon-neutral alternative building materials signifies a crucial stride towards addressing this environmental challenge.

Andrew Petrozzi, Director and Head of Canada Research, Newmark Canada

Although I am consistently impressed by innovations in technology and design, what struck me in 2023 was the people: how we as a commercial real estate industry responded in uncertain times. Our industry is one of resilience and tenacity, built upon the foundation of collaboration. Throughout 2023, we became even more solution-oriented, staying close to our clients and finding creative ways to navigate them through the new roadmap of economic changes. Avison Young’s unique offering of an integrated, cohesive team approach demonstrates how holistic services under one roof can break down siloes – and put people first – by eliminating confusion and adding efficiencies.

Mark Fieder, Principal and President, Avison Young Canada

Do you believe builders will be more or less busy in 2024?

The outlook for ETRO is positive.  We are looking at a significant revenue jump from 2023 to 2024 along with continued hiring of all roles within the company from field operations to leadership roles.

Mike Maierle, President ETRO Construction Limited

I expect builders will be busier than 2023. The push for housing and GST rebate will drive that sector even more. I expect that decarbonization will play a major role in new work for those involved with deep energy retrofits of existing buildings.

Dom Costantini, President, BLDR Consulting Corporation

I think we will continue to see cranes in the sky across the Lower Mainland and have a similar business pace.

Jeannine Martin, VRCA President

We anticipate a busy future for the construction industry. Here’s why: Economic Outlook: A stable or growing economy in Canada and North America likely means sustained or increased construction activities. We’re closely monitoring economic trends and government infrastructure investments, which seem promising.  Technological Advancements: Our commitment to 3D concrete printing and additive manufacturing puts us at the forefront.  These emerging technologies could lead to new projects and improved efficiencies, boosting our workload.  Environmental Focus: The shift towards green building standards aligns with our expertise. This trend could bring more business, especially from clients prioritizing eco-friendly construction practices.  Residential Growth: A strong housing market often boosts commercial construction. If housing demand stays high, we might see a surge in residential and subsequent commercial projects.

Jeff Olafson – CEO, Business Development, Gardon Construction Ltd.

I think this will depend on what markets and industries you work in. I think overall new construction is going to slow with the exception of large infrastructure and hospital work. Retrofit and service industries will likely remain consistent and busy. New developments are slowing with the high cost of borrowing.

Brandon Bird, Chief Executive Officer, Bird Mechanical Ltd.

The past few years have seen compounding crises. First COVID-19, then the shortage of people, then supply chain challenges and the historic escalation in materials costs, and most recently inflation and high interest rates. Through all of this, construction has been remarkably resilient. But economic and regulatory headwinds now slow our progress: Despite the demand for housing, higher interest rates and the impact on the cost of financing projects and mortgages have slowed residential construction. The prospect of interest rates easing in the second half of 2024 will provide some relief. While there is much uncertainty, both internationally and domestically, and a lot of reasons to be concerned about the outlook for 2024, we believe that work volumes, while softer than in the past few years, will remain relatively strong next year.

Chris Gardner, President – ICBA

Excitement is the build-up of innovation starting to take place and the one concern is still the high cost of construction, high interest rates and high inflation that will slow down the construction of new projects.

Zenon Radewych, Principal, WZMH Architects

While the nature of the projects driving construction activity are predicted to change with some major industrial projects winding down, massive public investment in infrastructure projects are expected to keep construction workers very busy for the next few years.

Brynn Bourke, Executive Director, BC Building Trades

I anticipate a busier year for builders in 2024. Labour and construction costs are stabilizing, and there’s a massive push for increased housing construction from the provincial and federal governments. This drive is expected to boost construction activity across Canada. The combination of residential construction, several large-scale rapid transit initiatives nationwide, the construction and refurbishment of Canadian power infrastructure and notable investments in transportation infrastructure, will ensure high demand for builders throughout the entirety of 2024.

Andrew Petrozzi, Director and Head of Canada Research, Newmark Canada

Avison Young expects developers to continue to hold on new construction, with the exception of industrial, multifamily and grocery-anchored retail. Should the industry see interest rate reductions by mid-year, we could see an increase in other sectors, like condo, toward the later part of the year as buyers become comfortable with interest rate levels, and construction and labour costs soften. We also predict that municipalities will help remove roadblocks to new development by streamlining approvals, changing outdated zoning requirements, and reducing taxes, fees, and levies. We also anticipate that investors will pay more attention to opportunities to acquire office assets.

Mark Fieder, Principal and President, Avison Young Canada

What is one thing that makes you excited about being in Canadian construction going into 2024, and one thing that makes you concerned?

I’m excited about the opportunities in all sectors with our continued population growth in Vancouver which is not only driving residential multi-family construction but also intuitional spaces for people to learn, play and create community.  I remain concerned about how interest rates and record high household debt will impact our communities and remain very concerned about housing affordability for middle and lower income families.  

Mike Maierle, President ETRO Construction Limited

I am excited about the big emphasis on innovation and opportunities in the Canadian construction industry. I am concerned, we are not investing enough in building the industry and that the complexity of projects and contracts risk management is not where it needs to be.

Dom Costantini, President, BLDR Consulting Corporation

One exciting aspect for the Canadian construction industry in 2024 is the potential for innovation in sustainable building practices, especially with technologies like 3D concrete printing.  Canada’s commitment to environmental sustainability and the push for green building initiatives can provide a great platform for your company to lead in additive manufacturing in construction.  On the concern side, the rising costs of materials and potential supply chain disruptions could pose significant challenges.  These factors can impact project timelines and overall budgets, requiring careful planning and perhaps even more innovative solutions to mitigate these risks.

Jeff Olafson – CEO, Business Development, Gardon Construction Ltd.

Starting with what makes me concerned, obviously I think the #1 answer anyone will give is the economy and what the future forecast of work will look like as we skirt a potential recession. With that said there is a lot of exciting infrastructure spending that the construction industry will benefit from based on infinitives being taken by the various levels of Government. I’m excited to see many new projects come out and take shape over the next year.

Brandon Bird, Chief Executive Officer, Bird Mechanical Ltd.

Excited: Excitement is an understatement when you consider construction’s massive impact. Nearly 250,000 men and women work in construction in B.C., an unsung hero accounting for 10% of our economy. It also presents endless challenging and inspiring career opportunities. Construction is dynamic and fast-paced – people wake up every day and go to a job site to build everything around us, creating inspiring legacies that shape our communities and the way we will live for generations.   Concerned: However, we should all be concerned about the ongoing shortage of people being acutely felt throughout the industry. For young people, we need to do a much better job of telling the entrepreneurial story of construction, highlighting the exciting ways technology is changing the way we design and build. We also need to do a better job of attracting people to Canada who have a background in the trades – to date we have done a poor job of identifying the skills gaps in our economy and attracting the talent we need to fill those gaps. Currently only about 2% of new immigrants to Canada end up working in a construction trade.

Chris Gardner, President – ICBA

I think the opportunity that collaborative business models bring is something to be excited about in 2024. Also, the opportunity for industry to recognize the significant role women and underrepresented groups can play in advancing construction both by helping to mitigate the labour shortage and improve business. One concern I have is that although the construction industry equates to 7.4% of the national GDP and  10.3% to B.C.’s GDP, it does not get the level of attention from government it deserves.

Jeannine Martin, VRCA President

I’m both excited and concerned about the labour supply challenge we face. On the one hand, there has never been a better time to join the construction industry. Employers are hiring and work is steady making an apprenticeship much more manageable. The benefits of a career in the trades are clear, with high wages and improving working conditions. On the other hand, we will need to work harder than ever as an industry to build new pathways to recruit, assess and properly place a whole new generation of workers. More employers will need to commit to sponsoring apprentices and industry will need to work together to promote construction careers to a more diverse range of workers.

Brynn Bourke, Executive Director, BC Building Trades

I’m excited about the adoption of new technology, especially for improving sustainability in building construction and design. This is critical, as the built environment is a major contributor to greenhouse gas (GHG) emissions, and progress in this area is needed in order to hit emission reduction targets. A significant concern I have is the demographic shift impacting the construction workforce. If not managed effectively, this generational shift could hamper construction activity precisely when it’s most needed – especially in sectors like housing, hotels and infrastructure.

Andrew Petrozzi, Director and Head of Canada Research, Newmark Canada

I am positive about Return to Office efforts – and, as a by product of that, about office leasing and sales. Of late, we are seeing some pent up demand in the market for office space and I see that carrying into 2024. As a matter of fact, for investors with longer-term outlooks and higher risk tolerances, I’d recommend looking at this sector as there are opportunities in the broader Toronto area. For 2024, we continue to keep a close eye on the interest rate environment and the surrounding uncertainty. We predict high interest rates will keep GDP growth in negative territory until spring 2024, creating short-term headwinds for the real estate market. However, we believe that 5.0% marks the peak for interest rates.

Mark Fieder, Principal and President, Avison Young Canada